Monday 25 November 2019

Govt plans to scrap e-comm ‘gifts’ to curb China imports

Govt plans to scrap e-comm ‘gifts’ to curb China importsBENGALURU: The government is considering amending its rules to completely remove the provision under which citizens can receive duty-free ‘gifts and samples’ valued at under Rs 5,000 from overseas, after finding its rampant misuse by Chinese ecommerce vendors, senior officials ET spoke to said.

The Central Board of Indirect Taxes and Customs (CBITC), which formulates policy concerning levy and collection of customs, was considering a cap on the number of gifts an individual can receive, but has decided against it given the complexity in its implementation.

“There were multiple legal options we were looking at, one being limiting the number (of gifts) to four per individual. But to implement this practically would be difficult, so we’re looking at a policy that prohibits the clearance of gifts altogether,” said a senior government official, who spoke on the condition of anonymity.

The customs department began cracking down on ecommerce imports masquerading as gifts in November last year. Starting this year, an approach to block the clearance of such packages across all express cargo ports was adopted, leading to a massive drop in the number of gifts coming into the country.

The official said all the three major express cargo ports in Mumbai, Delhi and Bengaluru, which constitute 90% of such imports, had blocked clearance of gifts. Other ports were also notified to ensure Chinese ecommerce vendors did not shift their base, but no such phenomenon has been seen. “We’ve curbed it (import of gifts) completely. Now policy-wise we’re planning in such a way that the gift word itself is removed,” said the official.

“The policy can say clearance sought as gift is not permitted, or in other words, whatever you’re importing you need to pay duties and clear it.”

While the board’s action againstimports through the gift channel has been largely tackled, another route for imports has opened up. Firms have been found to be acting as intermediaries between customers and Chinese ecommerce companies, to avoid paying higher duties that personal imports attract.

ET had reported in June that the Mumbai customs port had seized hundreds of packages of firms such as Sino India Etail and Globemax, which were acting as importers on record for Chinese firms SheIn and Club Factory, respectively. Both firms were found to be undervaluing imported goods. “B2C imports coming in the garb of B2B imports is another problem. Anywhere we see import volumes surging, we look into it and take appropriate action. However, the number of importers who don’t cross this threshold are massive, and we can’t look into everything,” another government official said.

The board has been actively seeking feedback from the industry on ways to curb duty and GST evasion by ecommerce vendors located outside the country, ET had reported in August. For now, the board is working with the Department for Promotion of Industry and Internal Trade by furnishing inputs for the latter’s comprehensive ecommerce policy. One of the measures that has already been highlighted in the draft policy is mandating all ecommerce entities, global and local, to register themselves in India for the purpose of monitoring their sales.

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